Hotel, apartment or commercial property: how a private investor chooses

The three assets are often presented as three flavours of the same thing, rental income from property. For a private investor they are three different jobs. An apartment pays for the property. Commercial space pays for the property and the tenant's reliability. A hotel pays for the property and for a business that is run every day. This guide compares them on six points and ends with rules by investor profile.

What you actually buy in each case

• Apartment: a residential unit let long-term or short-term. Income depends on local rents and, for short lets, on local rules.
• Commercial property: offices, shops or logistics let to businesses, usually on multi-year leases. Income depends on the tenant and the lease.
• Hotel or hotel unit: a whole hotel, a room in a condo-hotel or a branded residence. Income depends on occupancy and room rates, and on who operates. The six forms are set out in hotel real estate for private investors.

Income: stability against upside

Prime yields give a rough picture of what the market pays for safe income. In 2026 Cushman & Wakefield puts the European prime hotel yield at 4.75 percent, while broker research reported prime offices at about 4.9 percent and prime logistics at about 5.2 percent. These come from separate sources and periods, so they are a sketch and not a ranking. Residential yields vary widely between countries and cities; see rental yield by country. Prime figures describe the best assets; ordinary assets yield more because they carry more risk, and the gap differs by market.

What differs more is the shape of the income. A lease fixes the rent for years. A hotel's income resets every night: European RevPAR rose about 3 percent to around 101 euros in the first half of 2026, but forecasts for 2026 and 2027 are close to flat, so growth depends on rate rather than occupancy. A long-let apartment sits in between, with rent reviews tied to local law.

Volatility and operating leverage

Fixed costs make a hotel's profit swing more than its revenue. In the worked example in how to value a hotel, a 7 percent fall in revenue cut net operating income by about 20 percent, on stated assumptions. An apartment's costs are small relative to rent, so its income moves less. Commercial property carries a different risk, vacancy: when a tenant leaves, income drops to zero until the next lease, and the unit may need work first.

Effort and who carries the operation

• Apartment: low to moderate with a property manager, higher for short lets.
• Commercial: low during a lease, high during a vacancy.
• Hotel: the highest unless you lease the building to an operator, in which case your risk is the operator. Under a management agreement you still carry the operating result. See management agreements, leases and franchise and how to choose a hotel operator.

Regulation

Short-term rentals face stricter rules in many cities. One market review reports that Paris cut the cap for renting out a main residence from 120 to 90 nights a year and that platform listings fell by about 15 percent in 2025. Licensed hotels sit outside such home-sharing caps but have licensing, safety, planning and tax rules of their own. This regulatory shift is one reason urban long-let apartments have been seen as steadier than holiday lets.

Financing

Market briefings put bank loans on quality European hotels at about 55 to 65 percent of value in the first quarter of 2026, with higher ratios for leased hotels than for hotels under a management contract, and lenders typically look for debt service cover of roughly 1.3 to 1.4 times. These are indicative figures that must be confirmed with a local lender. Apartments are financed as housing, but non-residents face tighter terms in many countries; see mortgages for non-residents. Commercial loans depend on the lease and the tenant. For the hotel side see hotel acquisition financing for foreign buyers.

Exit and liquidity

Apartments have the deepest pool of buyers, so they are generally the easiest to sell. Commercial space has fewer buyers, and a vacant unit is hard to sell. A hotel has the thinnest market: in the first-half 2026 transaction review, real estate investment companies were the dominant buyers and private equity and wealthy individuals were net sellers, which suggests that professionals set the price of good assets. That is our reading, not a measured fact. See exiting a hotel investment.

Putting the three on one footing

Whatever the asset, reduce it to the same line before you compare: the price plus buying costs, set against the net income left after every cost you will actually bear. For an apartment that means rent less vacancy, service charges, management, repairs and tax. For commercial space it means rent less the costs the lease does not pass to the tenant, an allowance for vacancy and the cost of finding a new tenant. For a hotel it means net operating income after the operator's fee and the reserve for furniture and equipment. Then add three tests. What happens to net income if the main driver falls by a fifth (rent, the tenant, occupancy)? How long would you wait for a sale if you needed one? What are you being paid for the extra work and risk compared with the simplest alternative? If a hotel's net income is not clearly higher than a comparable apartment's after these tests, the extra work is not being paid for.

Concentration and single points of failure

Each asset has its own single point of failure. An apartment depends on one tenant and one building. A commercial unit depends on one tenant and one lease date. A hotel depends on one operator, one destination and one season. The larger the share of your wealth in one of them, the more that single point matters. Holding more than one asset class, or more than one location, is not a return enhancer, but it is the plain way to keep one bad year from deciding the outcome.

Where a hotel can make sense

A hotel is not simply a risky apartment. It can make sense when you have capital you can leave for years, a reserve you can add to in a poor season, a clear view of who will operate it and on what terms, and a price that leaves room for an exit yield above the one you pay. It makes less sense when the case rests on a single quoted yield, when the operator's income is the seller's own promise, or when you would be forced to sell in a weak year.

Time horizon and capital growth

Income is only part of the return. Over five to ten years the change in value matters as much, and it depends on what you pay and on the exit yield you get. A hotel bought at a low cap rate in a rising market can lose value if yields widen, and the 2026 reviews warn that renewed inflation and higher financing costs may stop compression. An apartment's value follows local housing prices and rents. Commercial values follow rent levels, lease length and tenant quality. Do not assume the entry yield will still be there at exit, and test your plan against a higher exit yield.

Tax

Taxes depend on the country, the holding structure and your residence. For a Polish tax resident, rent from an apartment let privately falls under the rules described in tax on foreign rental income for Polish residents. A hotel run or leased as a business, or held through a company, is likely to be taxed differently, so check with an adviser before you buy. See holding structures and taxes for hotel owners. This is general information and not tax advice.

Questions to ask for each asset

• Apartment: what are the local rules on letting, the service charge and its history, the vacancy in this building over the last two years, and what rent could you realistically achieve with a long let?
• Commercial property: who is the tenant, how long is the lease, who pays for repairs and insurance, is there a break clause, and what would it cost to re-let?
• Hotel: who operates it, on what contract and for how long, what are the audited accounts for three years, what does the reserve for furniture and equipment look like, and what is the seller's evidence for the occupancy it quotes?

Rules by investor profile

• You want steady income with little effort and a ticket below roughly half a million euros: a long-let apartment in a city with year-round demand is usually the simplest. A hotel unit sold with a promised yield needs the checks in rental pools and guaranteed yields.
• You have one to five million euros and want a business as well as an asset: a small hotel or guesthouse can fit if you budget for a salaried manager and a cash reserve; see hotel investment from 1 to 5 million.
• You want contractual income from a tenant: commercial property on a long lease, after checking the tenant and the lease end date.
• You want hotel exposure without operating work: a lease to an operator or shares in listed hotel companies, accepting the loss of control.
• You are above ten million euros: the route is institutional; see portfolio and institutional route.
• You may need to sell within a year or two: choose the most liquid asset, not the highest quoted yield.

Common mistakes

• Comparing a hotel's gross revenue figure with an apartment's net rent.
• Using last year's occupancy as a forecast.
• Ignoring the refit cycle and the reserve for replacing furniture and equipment.
• Buying on a brochure figure with no contract or accounts behind it.

FAQ

Which is the safest? Safety depends on the specific asset, tenant or operator and on your financing; apartments in deep markets are the most liquid. Which gives the highest return? The highest quoted yields often carry the highest risk, so compare net income on one basis. Can I combine them? Yes, many investors hold an apartment for stability and one higher-risk asset for upside.

How we help

We help check, compare and negotiate across the three asset types on one net basis, and we do not promise returns. You can look at hotels in our catalogue for what is currently listed with us.

This article is informational only and is not legal, tax or investment advice. Figures are indicative, come from market and industry sources and change over time; confirm current numbers before you buy.